Teacher uses money to teach responsibility, finance

There's no money in education these days, Aloe Elementary teacher Kelly Lorance will say, unless you're a fifth-grader in her class.

On any given day, there are hordes of cash spilling from students' fingers or waded into desks for safekeeping.

One student has $500 saved, and Garrett Weber, scarcely taller than a doorknob, is already a landlord with multiple tenants.

Lorance's students practice economics every day in their self-created society by earning fake cash, buying and selling everything from pencils to $2 rubber duckies.

"It teaches them everyday life skills that you can't really teach to them in a lesson," Lorance said. "I can't really teach them how to be organized by pulling up a lesson plan. It's got to be hands on to show them what our society is."

The concept is simple: Students get paid for earning good grades or odd tasks and use it to pay obligations like desk rent or fees for missed assignments. They can even save their money and buy up other student's desks, like Garrett does.

He's a slight, blond-headed boy who wears glasses and quickly interrupts his fellow students as he explains how he's come to be a landlord.

"It feels like you're gaining power over someone," he said.

Garrett bought three of his classmates' desks, lowered the monthly rent, but still nets $60 at the end of every month. His goal is to have the most money in the room and continue growing his business.

"I want to buy the whole room," he said.

Every bit of the approach is student driven, Lorance said. Students set the prices for job salaries - a janitor earns $15 while a tutor earns $20 - and so on. Students also set their grading pay scale and can earn up to $3 for an "A" or owe up to $5 for missed work.

The approach comes at an ideal age and in a perfect way, said youth financial literacy expert Lori Mackey.

"Employers reward sales people with commission, and so on, and when you reward a child with money, you're just teaching them how money works," she said.

Grade school is an ideal time to start simple financial concepts like compounded interest and how to buy and sell things because teachers have students in one classroom the entire day, unlike upper grades. If students grasp the concepts early, it can prevent them from financial woes later in life.

"The less educated you are with money, the more it costs you," Mackey said.

With the economic climate deteriorating, Mackey believes financial literacy must start with children now more than ever.

"Our states are falling apart because they can't manage money. So we, as parents and states and educators, have got to teach financial literacy," she said. "The only way we can do that is teaching our children to work with money."

But the love of money also ushers another concept - greed.

When Lorance's students drop money on the floor, it quickly becomes a free-for-all.

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TEACHING CHILDREN FINANCE Talk about money often Create four habits earlyThe smarter way to pay an allowanceWhen do you start giving an allowance? Money beliefs and habits start extremely young. Always talk about money in a positive tone, never negative. Never say we cannot afford it, just say it's not in the budget right now.

Teach the 10/10/10/70 concept. Ten cents out of every dollar is set aside for savings, 10 cents is set aside for investing, then 10 cents for giving and your child is able to spend what is left over, which is 70 percent, or 70 cents.

Allowance can be used as a positive learning tool that shows children how to earn an income, finish a job to completion and become responsible. Think of allowance as a tool for teaching financial literacy.

This depends on the personality of your child. If at age 2, he wants anything and everything, then it's time for some money lessons. The amount you pay a child depends on the family income, not age or ranking.